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As you'd expect with an "overlooked" pick, the year-to-date charts on both of these aren't exactly tech-rocket pretty. They're both small capitalization stocks, a group that's sorely lagged its big, brash peers in the S&P 500 and Nasdaq 100.

Still, the charts haven't scared off Preston Athey, manager of the T. Rowe Price Small-Cap Value Fund
$prsvx
with $1.44 billion in assets under management. As of Dec. 29, the fund was up 0.10 percent for the year.

IT Industries: contrarian play

The Pittsburgh company is in environmental services and pollution control and clean-ups. Darlings of the 1980s, environmental stocks are among the biggest stinkers for 1999, thanks in no small part to the accounting blowup at Waste Management
WMI, -1.00%
this July.

"Guilt by association," says industry analyst Leone T. Young at Salomon Smith Barney. "Interest has moved dramatically out of these stocks... I feel like the Maytag repairman."

She recently put a $16 price target on the stock, which is now trading in the high 8s. She also thinks that the company this quarter is going to show it's generating the cash that some investors have been waiting to see before they look at the stock more seriously.

She's a bull on it. So is Athey. T. Rowe Price owns about 8 percent of the company's stock.

Here's why: The company is one of the two largest to do remediation of polluted sites, Athey says. Sadly, that's a steady business. The Department of Defense alone has a huge budget for cleaning up old bases and sites, and they won't turn over a site to the local authorities until the job is done.

"This company is probably the largest pure-play environmental companies in America today," he said. He's looking for earnings per share of $1.50 in 2000, which means the stock is trading at something like 6 times earnings.

After making some acquisitions, the company has been "solidly" profitable for the past five quarters, he said.

"I have a lot of cheap stocks that have the growth rate that this one is showing," he said. Yet IT's got a $4 billion backlog, "it's not like this is going to stop tomorrow," he added.

LSI Industries: Oil mergers play

LSI' stock is another slumper of late. Analyst Kent Newcomb at A.G. Edwards says he knows of no news behind the stock's slide from a Dec. 2 peak of 25 1/2. It's now trading in the middle of its 52-week range in the low 20s.

Athey's looking at the stock as a play on mergers in the oil business. The Cincinnati company designs and makes lighting fixtures with graphics; in other words, the lit-up picture signs you see across suburban America.

T. Rowe Price owns about 10 percent of LSI. The stock was added to the Russell 2000
"
index of small-cap stocks this summer.

LSI's major markets include gas stations/convenience stores and other retail sites. Considering this year's news in the oil industry, namely the Exxon-Mobil merger, and the BP-Amoco deal, the company is positioned take part in what could be some significant signage work as the oil giants divest gas stations, and make other changes.

"We think that the petroleum and convenience store industries accounted for half of their sales in 1998," he said. Athey's expecting the company to post earnings of $2 a share in June 2000, which puts price-to-earnings at some 10.5. "Those numbers alone say this is a cheap stock," he said.

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